Saturday, May 10, 2014

Economic Dynamism, RIP

Okay I get it... the post title is over the top. Just the same, this is one of those days when it seems as though my heart has been ripped out, by the disappearance of economic growth. A considerable amount of prosperity which was taken for granted, has slowly faded over the course of my adult years. If I feel the loss too keenly, extreme loneliness is one of the main results of my lack of employment. What's more, this is a form of loneliness I wouldn't wish on anyone - not even my worst enemy. By no means is a relative decline in business formation a figment of my imagination, for in a recent study, Ian Hathaway and Robert E. Litan wrote:

...business deaths now exceed business births for the first time in the thirty plus year history of our data.

They also noted that this decline is not limited to particular industries. Instead, the lack of dynamism extends across the U.S., in all but a few primary cities and regions. If you live in one of those towns or regions with few sparks of hope on Main Street, you're not alone. The downtown where I live is a sad reminder of its earlier days, and yet the school system here thrives in part because we have the reputation of being one of the safest communities in the state. Like myself (forty one years earlier), many who are about to graduate, often want to leave town and have brighter horizons on their mind. Small wonder!

But the fact remains: there are far too many hometowns like the one I returned to three years ago, which have also been left behind. How many schools continue to churn out new graduates who seek a "sweet spot" where they can thrive? Where to begin...this post isn't really a rant, just a despairing lament. Why do societies allow themselves to fall into holes such as this? Why do so many people allow one another to fall away from the economic circumstance which could sustain them as communities?

There is a growing reliance on larger business formations, as Arnold Kling also pointed out in his link to the above study. And clearly, these formations exist in places other than where many end up living their lives. Certainly, many a Main Street has long since surrendered to the real moneymakers, just as agriculture was given over to larger business interests in the twentieth century. In the meantime, retail and manufacturing are no longer a substantial part of the economies which had lost their agrarian roots.

The end result is a growing segment of the population which - unless they escape to or visit the city, has too few reasons to even go outside one's door to interact economically with the world. While there are the obvious exceptions of family events, religious life and sports, these activities are not enough to sustain the numbers of people who need the greater links to society which the economy once promised.

I don't think political parties realize the degree to which a lack of economic dynamism, lies behind many of the more difficult issues of the 21st century. Perhaps it just isn't possible to know what economic isolation feels like, unless one has experienced it, themselves. What's more, the ramifications go well beyond that of baby boomers such as myself who have fallen away from the marketplace. While Noah Smith gave the above linked report a considered response (also check Ryan Decker's links), I have to disagree with Noah's musing that the whole debate might only be a "non story".

When economies are strong, they provide motivation and inspiration for everyone to keep going, whenever the going gets tough. Strong economies make strong individuals, because they provide concrete ways to continue interacting with the world. This becomes all the more important, if and when our personal and familial interactions fall short. Dynamic economies are needed everywhere and not just in prosperous regions: meaningful economic life is the present day reality of meaningful lives for as many citizens as possible.

Once economic setbacks occur, their effects can have an unnerving tenacity that proves quite difficult to reverse. I continue in my blogging efforts, in the constant hope that others will not have to suffer loneliness (among other burdens) for economic reasons. For a long time, I was embarrassed to admit that loneliness was the prime reason I started this project. But perhaps I shouldn't be embarrassed anymore. It could well be that social factors such as this have far more to do with the desire to produce and consume, than any approaching singularity ever counted on.

How much production and consumption might depend on social elements which appear to run counter to productivity gains? Indeed, matched time use could be the primary means to maintain efficiency gains, which otherwise tend to drive out social elements over time. Perhaps by introducing matched time use as service product, economic dynamism would not have to die an untimely death after all.